Last week’s Fed and ECB meetings were duds, in my opinion, and pretty much what I expected. That’s why nearly all markets will soon resume their major short- and intermediate-term trends. So don’t expect a quiet August. Lots of opportunities and trending moves are near at hand.
Check out my latest video update for more.
Best,
Larry
P.S. Quite frankly, you should never let the news dictate your investing or trading. Let the markets themselves tell you what they’re doing … and going to do. To learn how to do that, join with my Real Wealth Report subscribers, where you get hard-hitting analysis based on what the markets are actually telling you. Join now by clicking here.
Video Transcript
Good morning! This is Larry Edelson for my Uncommon Wisdom video market update for Monday, August 6.
The past week was certainly loaded with lots of news as we had the Federal Reserve meet last Wednesday and then the European Central Bank (ECB) on Thursday. No real surprises, however; the markets were certainly widely anticipating the meetings.
The Federal Reserve and Mr. Bernanke basically announced what I expected, and what is to be expected, which is that they’re going to maintain their current low interest rate policy and all available options to help the economy, but no decisive action yet.
The main reason for that is the Federal Reserve is now looking toward the ECB to solve the European sovereign-debt crisis.
The ECB on Thursday basically announced that they’re going to get more serious about the European sovereign-debt crisis, but they made no substantial announcements.
Overall, the meetings that the markets were waiting for last week — announcements from the Fed and the ECB — were largely a disappointment. That is in keeping with the overall trends, which remain disinflationary.
So with that, let’s go right to the charts.
Gold: As I’ve noted in my previous writings and my previous videos, gold is coiling up for an important move. It could still move just a little bit higher up to $1,660, $1,680 possibly on a short-covering rally, but the trend remains down.
I still fully expect, although it’s taking longer than I expected, to see gold drop below $1,500, down to the $1,450 level and perhaps even lower in the weeks ahead.
Silver: The silver chart pretty much the same as gold; although, overall silver is weaker largely because it’s an industrial metal and it’s very sensitive to the slowing economies in China, Europe and the United States.
You can see that silver here is just climbing sideways with a slight upward bias, a slight little rally, then it fell back down along this support line here.
I still fully expect lower prices in silver and probably a surprising move — shocking move — to the downside. Having said that, it is still possible for silver to stage a little brief short-covering rally, but overall the trend remains down.
U.S. Dollar Index: The Dollar Index has pulled back to this trend line here. It did briefly penetrate it in anticipation of further quantitative easing by the Fed and the ECB. But right after the meetings, the dollar started to rally again.
We’re probably going to see the dollar go a little bit sideways here and then move to a new high. The trend remains up in the short and intermediate term for the dollar.
The Dow Jones Industrials: The Dow Jones Industrials paused before the meetings last week and again here it’s holding support. But cyclically and technically I’m still expecting a move down in the Dow.
We’re getting very toppy in this area here, so please be aware that there are some surprising moves coming up in the markets. I expect them to resolve themselves and pick up momentum no later than the second week of August.
So we’re here now and you should see some trending moves start to develop out of these largely sideways, coiling markets over the last few weeks. Those trends will most likely be to the downside for almost all commodities and just about everything including stocks with the exception being the dollar.
That’s it for now. Stay tuned to my writings. I think the remainder of August and heading into September are going to be quite volatile and quite lucrative, though not without risk.
But the second half of this year actually heading right into the elections should be quite interesting markets, with lots of opportunities!
{ 17 comments… read them below or add one }
Just a word of thanks for putting in this comment section at the end of your Monday updates for our questions and comments. This really is helpful to me to be able to reach you directly. Thank you.
Larry; Still waiting for a move to the downside so I can get back in the market. Look forward to your updates….
I think your cycles are inverted. There are bearish divergences on TLT and UUP and it looks like money is flowing out of them into the stock market in anticipation of worldwide QE. The Fed and ECB have basically stated that they will do whatever is necessary to avoid a financial meltdown. We could see a nice rally through election day.
Larry, I get mixed messages about gold………..some say it will go as high as $5000/oz and yet I keep hearing lately that it will go below what it is today to below 1200/0z………………….
I get your newsletter and trust your expertise………………help……should I hold gold or sell?????
HI LARRY ANOTHER 2 WEEK WINDOW !! BE WATCHING !! ALWAYS TROUBLE !! LATER BOB
Gold and silver will probably go down, way down, but they could go up, a little, or a lot, maybe, but not necessarily, as they could also go down, way down, maybe, and that will before the third week of August, perhaps, but not necessarily.
Stocks are sideways, but could drop dramatically, but not necessarily, as they could also rise a little, maybe, but not necessarily, as they could also rise a lot, perhaps, then they could always keep going sideways, but not necessarily, but maybe.
Look for huge drops before the 3rd week of August in everything but the dollar, maybe, but not necessarily, as everything could also rise hugely, including gold and silver, perhaps.
At the very moment when all the world believes Europe will crash and burn, a miracle will take place. The Europeans, with their backs to the wall and facing utter collapse, will finally put aside their nationalistic and ethnic hatreds, and decide to join completely in a true United States of Europe. Why? Because their only alternative would be the abyss.
That will be akin to a New Holy Roman Empire, and it will astound the world—-growing into the mightiest economic powerhouse since Atlantis fell beneath the waves. So you will have a massive powerhouse as the Asian nations join in cooperation over there and another powerhouse in Europe.
And the U.S.——well the outlook is not too rosy for now.
The sideways and slight up-down action in the precious metals is TOTAL MANIPULATION of the markets. It has nothing to do with any economic forces. It is being controlled.
Why? Because the scheisters that own the inverse ETF companies (the shorts) are making a killing by destroying the value of your short positions more and more with each passing day.
It should be a crime. But it is allowed, and they rob you blind by manipulating the metals markets in this never-ending sideways movement—–exactly what is needed to erode short positions and steal your money.
Can you spell C-A-B-A-L ?
What about oil???
Hi Larry,
Thank you very much for sharing your insights. I always look forward to them.
Do you believe that what will lead to the final collapse of the dollar will happen in the following order?
Crack in derivatives market, currency wars, trade wars, then once the Federal Reserve announces an increase in interest rates all paper assets will be completely lost.
Sounds like somebody has been listening to ole Lindsey Williams. That is EXACTLY what he is predicting will happen.
http://www.youtube.com/watch?v=VW5HAn8r6wo&feature=related
It looks like you got stopped out of SPXU at 42.50 either yesterday or the day before depending upon whether it was on a closing basis. Oil is over 92 and change your original bullish target. Interestingly enough SLW has broken out even though the price of silver has not. This could be signaling a big move up in precious metals.
Larry is predicting a big drop in silver to hit soon, but another analyst is saying the very opposite. He is saying now is the time to buy because silver will be headed way up:
http://moneymorning.com/2012/08/10/the-dumb-money-hates-silver-its-time-to-go-long/
Is America is being prepped for a China takeover? Look at the cover of magazines, look at TV and magazine ads, look at the current exhibit at the San Diego Zoo—-China, China, China.
Been to the hat rack lately in your local department store? The number one hat for young folks now is the Chinese worker’s hat popularized in the days of Mao and worn by all.
America is in debt to China for trillions (gold taken in the 1930′s and long before and no interest paid but only paper bonds given)—-now the debt is come due!
China will continue to take over U.S. assets, companies, real estate, land, etc. It owns all the AMC theaters here. Did you know that?
http://www.huffingtonpost.com/2012/05/21/amc-theater-wanda-group_n_1532441.html
The great humbling of America continues.
Yer obviously very young or choosing ot ignore history..
The japanese bought EVERYTHING back in the last 70′s and early 80..Including pebble beach golf course..
Now where are they???
All we’re gonna do is put the turd in China’s pocket..
Seen all this before…just more zeroes..
Ole Lindsey Williams, the preacher turned economist who claims to get all his information directly from “the elite” is predicting that ALL paper instruments will soon be worth only the paper they are written on.
Behind the scenes, there are massive machinations going on. A beleaguered consortium of banksters, that has been bilking the whole world for centuries, is being pursued by lawsuits on the local, state, and federal level. The LIBOR scandal is part of all that.
So there is a WAR of sorts between the banking cabal that controls the markets and the “white hats” who want to take them down–freeing mankind from the parasitic controllers once and for all.
Who do you think will win?
Hi Larry,
These slow moves are not helping the inverse ETF ‘hedges’. It seems like the Fed can continue to prop up the market by appearing to be ‘ready’ to take action. What if the plan is to make a big announcement but only do a modest QE? Also, would the Fed ever go the other way (as Paul suggests above)? Seems like they would have to be pretty confident about the economy to do something like that.